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2009 Assessment

Azerbaijan: Integrity Indicators Scorecard

Azerbaijan: Integrity Scorecard Report > Sub-Category: Budget Processes
Indicators		Score
40	Can the legislature provide input to the national budget?	67
41	Can citizens access the national budgetary process?	25
42	In law, is there a separate legislative committee which provides oversight of public funds?	100
43	Is the legislative committee overseeing the expenditure of public funds effective?	42

Indicator and sub-Indicator Details

Can the legislature provide input to the national budget?

40a: In law, the legislature can amend the budget.

Score:

YES

Comments: Under Article 95 of the Constitution, the Parliament based on recommendation of the president of Azerbaijan approves the national budget and controls its execution. Article 13 of the Law on Budget System states that the draft law on upcoming year's budget shall be submitted to Parliament for discussions no later that October 15 of the instant year and under Article 15.3 the Parliament shall approve it by December 20. Article 14 also stipulates that the draft law should be published in the media within 10 days from its submission to Parliament. Until approval of the budget as well as after its approval, the Parliament may amend it, if necessary.

References: The Constitution of the Republic of Azerbaijan; The Law on Budget System [ LINK ]

40b: In practice, significant public expenditures require legislative approval.

Score:

100

$Scoring Criteria :: 100 Score Criteria: All significant government expenditures (defined as any project costing more than 1% of the total national budget), must be approved by the legislature. This includes defense and secret programs, which may be debated in closed hearings. <p>50 Score Criteria: Most significant government expenditures (as defined) are approved by the legislature, but some exceptions to this rule exist. This may include defense programs, an executive\'s personal budget, or other expenses. <p>0 Score Criteria: The legislature does not have the power to approve or disapprove large portions of the government budget, or the legislature does not exercise this power in a meaningful way.$

Comments: Generally, all significant public expenditures require legislative approval. Specifically, there is one general number stated in an each expenditure part without going into specific details. Specific budget details (how to divide the money approved by the Parliament) are determined later by the relevant ministries and the Cabinet of Ministers. The Parliament also approves the Reserve Fund of the President based on needs.

However, it should be noted that there are also extra-budget expenditures that are funded by the State Oil Fund which are not approved by the Parliament, but rather determined by the President. In other words, yearly budget of the State Oil Fund is not included in the state budget and merely approved by the decree of the President. According to this decree, the expenditures of the State Oil Fund are directed to funding of different projects, to name but a few, implementation of state programs, construction works, etc.

References: 1) International Budget Partnership Open Budget Index-2008 Azerbaijan and Open Budget Questionnaire-Azerbaijan [ LINK ] 2) Interview with Hafiz Babali, journalist on economic issues, September 2009 3) Interview with Gubad Ibadoglu, an economist-expert of the Economic Research Center, September 2009 4) Reports by the Ministry of Finance www.maliyye.gov.az 5) Newspaper materials and articles of the Radio Liberty-Azerbaijan www.azadliqradiosu.az

Peer Review Comments: Expenditures of the state oil fund are not approved by Parliament, but rather determined by the president. There are items, such as details of military expenditure, public investments projects and highway funds that are not approved by the legislature.

40c: In practice, the legislature has sufficient capacity to monitor the budget process and provide input or changes.

Score:

100

Comments: Despite the formal requirement about the possibility of making amendments to the draft law on budget submitted by the government, in practice the legislative operates minor changes or input on the draft law.

References: 1) International Budget Partnership Open Budget Index-2008 Azerbaijan and Open Budget Questionnaire-Azerbaijan [ LINK ] 2) Interview with Gubad Ibadoglu, an economist-expert of the Economic Research Center, September 2009 3) Reports by the Ministry of Finance [ LINK ] 4) Newspaper materials and articles of the Radio Liberty-Azerbaijan http:?/www.azadliqradiosu.az

Can citizens access the national budgetary process?

41a: In practice, the national budgetary process is conducted in a transparent manner in the debating stage (i.e. before final approval).

Score:

100

41b: In practice, citizens provide input at budget hearings.

Score:

100

Comments: Generally, budget negotiations in Parliament are closed to the public. According to Gubad Ibadoglu, an economist-expert, his organization Economic Research Center files every year an official application to Parliament to get an to the budget discussions. However, there has not been any answer. It is stated in the Report of Open Budget Index-2008 of International Budget Partnership, the Azerbaijan provides minimal information to the public by scoring 37 percent out of 100. In practice, the Parliament discussions on budget do not take much time and Parliament usually operates only minor changes and input to the draft law on budget, submitted by the government. However, recently, the Parliament publishes all draft laws on its website ([ LINK ]). Without evaluating its effectiveness, it should be noted that citizens can go to the website and provide some input to the draft laws posted online. But it is matter of active citizenship as well as political will how far these inputs are followed by Parliament.

41c: In practice, citizens can access itemized budget allocations.

Score:

100

Comments: The draft law on the budget is posted on the website of the Parliament ([ LINK ]) as well as published in an official newspaper, Azerbaijan. According to Gubad Ibadoglu, an economist-expert of the Economic Research Center, citizens do not have access to itemized allocations.

In law, is there a separate legislative committee which provides oversight of public funds?

42: In law, is there a separate legislative committee which provides oversight of public funds?

Score:

YES

Comments: Under the legislation, the Chamber of Accounts is the legislative committee that provides control over the implementation of the national budget and reports to Parliament.

References: Article 92 of the Constitution of the Republic of Azerbaijan; The Law on Budget System; The Law on Chamber of Accounts [ LINK ]; The Chamber of Accounts [ LINK ]

Is the legislative committee overseeing the expenditure of public funds effective?

43a: In practice, department heads regularly submit reports to this committee.

Score:

100

Comments: In practice, all state authorities submit formal reports on expenses to the Chamber of Accounts.

References: 1) International Budget Partnership Open Budget Index-2008 Azerbaijan and Open Budget Questionnaire-Azerbaijan [ LINK ] 2) Interview with Gubad Ibadoglu, an economist-expert of the Economic Research Center, September 2009 3) Reports by the Ministry of Finance [ LINK ] and the Chamber of Accounts [ LINK ] 4) Interview with a formal employee of the Chamber of Accounts, September 2009

43b: In practice, the committee acts in a non-partisan manner with members of opposition parties serving on the committee in an equitable fashion.

Score:

100

$Scoring Criteria :: 100 Score Criteria: The committee is comprised of legislators from both the ruling party (or parties) and opposition parties in a roughly equitable distribution. All members of the committee -- including opposition party members -- are able to fully participate in the activities of the committee and influence the committee\'s work to roughly the same extent as any other member of the committee. <p>50 Score Criteria: The committee is comprised of legislators from both the ruling party (or parties) and opposition parties although the ruling party has a disproportionate share of committee seats. The chairperson of the committee may be overly influential and curb other members\' ability to shape the committee's activities. <p>0 Score Criteria: The committee is dominated by legislators of the ruling party and/or the committee chairperson. Opposition legislators serving on the committee have in practice no way to influence the work of the committee.$

Comments: Under the Law on Chamber of Accounts and Internal Charter of the Parliament, the Chamber of Accounts is composed of seven members which are president, deputy president, and five audits. The speaker of the Parliament nominates them and at least 63 members of the Parliament should vote for them. The last Parliamentary election in Azerbaijan was held on Nov. 6, 2005. According to the Central Election Commission, the ruling party won 63 out of the 125 seats, independent candidates garnered 42 seats, while the opposition won 10 seats in total. It should be noted that in the 2002 Referendum in Azerbaijan, the proportional system was removed and from that time elections have been based only on the majority system. However, the majority of the independent candidates elected were also pro-government. In this regard, appointed members to the Chamber are usually pro-government.

References: 1) International Budget Partnership Open Budget Index-2008 Azerbaijan and Open Budget Questionnaire-Azerbaijan [ LINK ] 2) Interview with Gubad Ibadoglu, an economist-expert of the Economic Research Center, September 2009 3) Reports by the Ministry of Finance [ LINK ] and the Chamber of Accounts [ LINK ] 4) Newspaper materials and articles of the Radio Liberty-Azerbaijan [ LINK ]

43c: In practice, when necessary, this committee initiates independent investigations into financial irregularities.

Score:

100

Comments: The Chamber of Accounts generally investigates financial irregularities. However, it is not aggressive in politically sensitive cases. According to the former employee of the Chamber, if there is a political pressure, the Chamber gives up its investigation even if there are alleged financial irregularities. t should be noted that annual reports on operation of the Chamber of Accounts are posted on its website, [ LINK ].

References: 1) International Budget Partnership Open Budget Index-2008 Azerbaijan and Open Budget Questionnaire-Azerbaijan [ LINK ] 2) Interview with Gubad Ibadoglu, an economist-expert of the Economic Research Center, September 2009 3) Reports by the Ministry of Finance [ LINK ] and the Chamber of Accounts [ LINK ] 4) Interview with a formal employee of the Chamber of Accounts, September 2009